Queensland's $1 billion Budget surplus has angered property owners who provided much of the extra cash but face big land tax bills.

Thousands of Queenslanders face hefty land tax bills for the first time because tax exemptions have failed to keep pace with the booming property market.

This week's announcement of a $1 billion state Budget surplus has prompted an angry response from land owners and the property industry, who have provided a hefty slice of the extra money.

The Beattie Government has been accused of engaging in "tax bracket creep in a different form" for failing to increase the level at which property owners begin paying land tax in line with spiralling property prices.

The land tax threshold was last changed in July 2003. At that time it was increased from $150,000 to $170,000 for companies, and from $200,000 to $220,000 for individuals.

The State Government also waives the first $350 of land tax liability for individuals, effectively increasing the threshold to $276,000.

But Property Council of Queensland executive director Robert Walker said the adjustments were minor compared with the enormous increases in land values.

Mr Walker said land tax, originally intended to target prestige property, was hitting many smaller owners whose properties were valued above the threshold but whose income had not increased.

"It's not the wealthy people. These are people who borrow lots of money to invest in property for the future," he said.

Treasurer Terry Mackenroth has played down the possibility of tax relief in this year's Budget, saying the extra millions will be invested in infrastructure.

A spokesman for Mr Mackenroth defended the land tax thresholds, saying
no state automatically indexed the levels to keep pace with property prices.
"Nonetheless, Queensland is the only state to apply three-year averaging of land values, which mitigates the impact of large valuation increases on taxpayers," he said.

Last year's Budget had also contained $300 million of tax concessions to help land owners, including reductions in stamp and mortgage duties.

Liberal leader Bob Quinn acknowledged the Government had allowed some flexibility for landholders in paying tax bills this year.

"But that's just covering up poor administration in terms of not taking into account the fact there's been a huge increase in property values ... and the thresholds haven't risen nearly enough. A lot of people who previously weren't paying any land tax have now been dragged into the net," Mr Quinn said. "And a lot of people who have been paying minimal land tax now end up with huge bills."

A number of land owners who contacted The Courier-Mail said their land tax bills had jumped by more than 100 per cent in the past 12 months.

New Farm woman Anni Baker, whose land tax bill has risen from $675 in 1997 to $6676 this year, said the extra cost would need to be passed on to tenants, potentially forcing many of them out of their homes.

Ms Baker owns some older units in inner-city New Farm as well as her own home.

"My net income on these flats has been less than $40,000 in the last few years and that is with minimal maintenance," she said.

She has owned the property for 17 years and said she now looked wealthy on paper because the value of the land the flats were on had skyrocketed.

"This doesn't mean money in the pocket," Ms Baker said.

The Real Estate Institute of Queensland accused the Government of cynically targeting high-growth areas, particularly in the southeast, with special valuation audits to boost the tax take.

The special audits were ordered last year after a strike by valuers stopped the regular state-wide valuation program.

Mr Mackenroth's spokesman said that the special audits had targeted

"areas where valuations were likely to have changed and which would have carried land tax implications".

The Property Council's Mr Walker said many more Queenslanders would face land tax liabilities when the full valuations were conducted later this year.